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Computer Prodigy Has Paid Off for Engineers

December 29, 1987|STUART HENIGSON

Remembering the mad times two years ago when he and his partners were gambling everything--not just all their money, but their health and sanity too--on their product, Stanislaw Lewak admits he'd never do it again.

Lewak and three other computer engineers had founded Levco Corp. in February, 1985, with $10,000 and began making money selling kits that increased the memory of Apple's newly introduced Macintosh computer. But Levco still needed a breakthrough product that would guarantee the future.

The four engineers, Lewak, Doug Gilbert, Curt Johnson and Duane Maxwell decided to go after the ultimate "add-on"--a new-generation computer chip that quadrupled the processing speed of the Macintosh, a modification that Apple's engineers insisted couldn't be done.

After two months of 120-hour work weeks, sleeping in the office, ignoring their families, living on pizza and soda, the Levco team came up with an accelerator board called Prodigy that connected what amounted to an entirely new computer onto the existing hardware of the Macintosh.

Prodigy carried a price tag of $9,000--four times the cost of the original Macintosh desk-top computer--but cranked the Mac's processing speed up to that of a $40,000 mini-computer.

"That kind of work takes a terrible toll on your body," Lewak said. "When we were finished, we looked like we were dead."

Started Out Small

The initial market for the Prodigy was tiny--Levco sold "several hundred" at that price--but the product's performance got the company's name into every Macintosh magazine. The Prodigy was a technological tour de force, a silicon calling card that was worth thousands of dollars in advertising.

Propelled by sales of Prodigy, Levco's revenues for the fiscal year ended June 30, 1987, were $2.6 million. Sales of the Prodigy accelerator boards hit a peak of about 100 per month, according to Roger Phillips, who joined the firm last February as president.

"We were too dumb to know it couldn't be done," said Johnson of the company's invention. Co-founder Johnson put up the initial $10,000 that started the company.

Over the past six months, the Macintosh market has changed and so has Levco's. The new Macintoshes introduced last February are being taken seriously by the business community and they are selling fast, creating a much broader market for add-on products like Prodigy.

Accelerator boards are selling for as little as $700--Prodigy now starts at $1,500--but the market has grown to an estimated 40,000 to 120,000 units sold per year.

And Levco, one of only two surviving companies that started up trying to modify the Macintosh, is making the jump into the big time. In 1988, Phillips projects that Prodigy sales will hit 1,000 per month and overall sales of Levco products could reach $16 million.

To finance Levco's growth, the founders in August sold the firm to a publicly owned Mountain View-based company, Scientific Micro Systems, which makes computer peripheral products. Terms of the sale, a stock swap, were not disclosed.

The deal left Levco a wholly owned subsidiary of Scientific Micro, with the four founders in charge of research and development. Manufacturing and marketing of the "mass market" products, such as Prodigy and other accelerator boards and of lower-cost memory expansion units, have been moved to another Scientific Micro subsidiary with a dealer network of 2,000 retailers.

The Levco staff will be in charge of developing new products, marketing all the high-end, low-volume products, and developing new lines of business that sell complete hardware and software packages to selected professions, such as architects. Those businesses will generate $4 million in sales next year, Phillips estimated.

Remain Independent

Levco will continue to operate out of its Sorrento Mesa offices; since the Scientific Micro merger, the staff has grown from 23 to 25. The founders say the deal left them with the best of both worlds: the engineering challenge without losing their freedom working for someone else.

But even in the computer industry, where overnight successes are common, Levco's story is unusual because the company started out selling "outlaw" products. Unlike software developers, which Apple actively encouraged for the Macintosh, hardware developers were taboo.

In contrast to the IBM PC, which had slots for accessories such as accelerator boards, the Macintosh couldn't even be opened with normal tools. What was more discouraging, Apple threatened to void the warranty or refuse service to anyone who modified a Macintosh.

Levco's outlaw approach was demonstrated when it introduced its first product at the Mac World computer show in San Francisco in 1985. The product, a memory-expansion kit, quadrupled the data storage capacity of the original Macintosh. Apple was selling a similar kit for $1,000; Levco took its to market for $350.

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